Trend Lines Trading Strategy – Learn how to Buy Low and Sell High

Using trend lines in trading implies that you are waiting for the price of a particular instrument to rise to a certain level of which you know the market will surely bounce. You have to keep in mind that the market can react in the following different ways:

The market on the trend line can bounce off, that is, it can maintain the trend.

The market can push through the line, change the trend and create a new, opposite trend line

It is important for every trader who wants to fully utilize the trend line strategy to first learn how to correctly draw trend lines.

How to draw trend lines and how to improve?

At least two points are needed to draw a trend line. For an upward trend, there have to be at least two swing lows in the market. For a downward trend, the market must produce at least two swing highs.

The figure below shows the graphic explanation of how an upward trend line is drawn:

Some traders may find it easier to draw a trend line on a line chart (like on the one above), where a trend line marks and connects the swing points.

A trader can also change to a candlestick or a different kind of chart and draw a yellow parallel line, from the first swing low. At the point where the price hits the trend line, we can either sell or buy depending on whether the trend line is showing an upward or a downward trend.

This strategy does not require any indicators, but you can only benefit from it if you know candlestick patterns because they can warn you ahead of time about a changing trend.